Beware Of Bait and Switch Internet Pricing Practices

I had a completely exasperated listener contact me this week who had been running down Internet pricing from car dealer websites, only to find out the very best prices were false and misleading.

I wrote on the subject of Internet “bait & switch” back in 2013 as I recall, but the problem is actually getting worse as dealers try their best to undercut each others’ prices. Perhaps most concerning is people believing the prices they see online are credible and the gospel.

Bait and Switch Tactics

Since a car dealer ever ran the first newspaper ad, there have been bait and switch tactics going on. Not all car dealers do this, but all the shady ones do. By definition, a bait and switch is when a dealer publicly prices a car with no intention of selling it for that price. As newspaper advertising has been on the decline for car dealers, most are turning to the internet to continue to mislead people.

Unfortunately, many people believe that everything on the internet is true. Oh sure, there are laws against this sort of practice, but in most states, the practice is so rampant that regulators cannot begin to enforce the laws on the books. We have seen more enforcement action from the Federal Trade Commission lately, but there is no way they can get to every dealer’s website, and frankly, some dealers are willing to pay a fine rather than advertise ethically.

Most Common Bait and Switch

The most common bait and switch involves pricing cars way below dealer cost. The dealer designates one particular stock number or VIN at that price, and once the vehicle is sold – whether at that price or not – none of the other vehicles on the lot can be purchased for that price. The salespeople at places like this are trained to waltz you around the lot, finally declaring that the advertised vehicle “must have been sold already” and then finding a similar one, vowing to “get as close to that ad price as possible”. Let the games begin.

New Online Trend

Recently, a dealer affiliate of the radio show alerted me to the newest trend online. One of his Chevy competitors was advertising prices with every factory rebate available, even private offers for which most people cannot qualify for. These days, many automakers offer extra rebates for our military people for instance. This dealer was using GM private mail offers ($2000 in some cases), military discounts, and other offers like an extra rebate for credit union members or Costco cardholders. Over 99% of the people who walk into the dealership will not qualify for all or perhaps any of those rebates.

Worse, this particular dealer doesn’t spring this news on you until you have gone through the entire process of buying a car. While in the finance office, some hours later, you get the bad news. Sadly, too many people are worn out and they just wave the white flag. Another successful bait and switch, and another bad dealer rewarded for unethical behavior.

You will see what appears to be a great price and the words “any and all rebates applied”. Major red flag there. A good dealer will break out how it arrived at the price advertised. For instance, MSRP $30,988 minus $3000 factory rebate, minus $2500 dealer discount-Sale Price $25,488. Then you might see $24,488 with Ford Credit financing. That is the right way to do it.

Buried Charges

One dealer I ran across was pricing cars online and buried in the website, on a different page were the words “all prices plus freight charges”. REALLY? I have seen some shady stuff over the years, but this was really bad. Freight charges are built into the dealers’ cost. In another instance, a dealer quotes a low-ball price and you see: price does not include dealer-installed options. That means they can charge you thousands of dollars over their Internet price for floor mats, window tinting, and wheel locks that cost the dealership about $200.

I have heard stories of people shopping dealers outside their area, sometimes driving for hours, even flying to an out-of-state location, only to find out they were somehow misled and cannot get the price they saw online. By now, they are tired and often have no way to get home, so the negotiation games start. They don’t want to start over again, so they give in and pay more than they could have gotten the same car for at their local dealer.

Here is the sad thing… many times people see these fraudulent prices online and take them to a good, honest dealership who tries to explain why it cannot match the price. Of course, the good dealer looks like a bad guy and probably misses out on a sale, while the consumer falls for the bait and switch at a different dealership.

I urge you not to reward the bad dealers with your hard-earned money. At the first sign of a bait and switch, leave. Then tell your friends.

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